Weekly Investment Update

Inflation dominated financial headlines this week, as the latest US Consumer Price Index (CPI) reading was higher than anticipated. On Wednesday, the latest year-over-year CPI reading of 6.2% was released, marking the biggest increase in more than three decades. “Inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me,” stated President Biden on the news.[1]

Investors fear that surging inflation may force the Federal Reserve to raise rates more quickly than anticipated in an effort curb rising prices. Both equity and fixed income markets sold-off on the news but stocks did bounce back somewhat on Thursday and Friday to end the week down just slightly. The S&P 500 (a proxy for large-cap US stocks) was down 0.3% for the week and the MSCI ACWI index (a proxy for global large-cap stocks) essentially ended flat. Bond markets also ended the week lower, with the Bloomberg US Aggregate Bond index (a proxy for US bonds) falling 0.3%.[2]

Line graph depicting US Consumer Price YoY and 10 Year Treasury Rate from 2012 to 2021

Geopolitical tension also increased last week, as the US warned European allies that Russia appears to be building up troops on the Ukrainian border. Moscow has been at odds with the European Union on migration and energy issues recently, which only exacerbates concern over their intent.[3]

Prices & Interest Rates

Representative Index Current Year-End 2020
Crude Oil (US WTI) $80.69 $48.52
Gold $1,868 $1,893
US Dollar 95.12 89.94
2 Year Treasury 0.53% 0.13%
10 Year Treasury 1.58% 0.93%
30 Year Treasury 1.95% 1.65%
Source: Morningstar, YCharts, and US Treasury as of November 13, 2021

Asset Class Returns

Category Representative Index YTD 2021 Full Year 2020
Global Equity MSCI All-Country World 18.7% 16.3%
Global Equity MSCI All-Country World ESG Leaders 21.3% 16.0%
US Large Cap Equity  S&P 500  26.2% 18.4%
US Large Cap Equity  Dow Jones Industrial Average 19.8% 9.7%
US Small Cap Equity  Russell 2000 23.1% 20.0%
Foreign Developed Equity MSCI EAFE 12.5% 7.8%
Emerging Market Equity MSCI Emerging Markets 1.4% 18.3%
US Fixed Income Bloomberg Barclays Municipal Bond 1.1% 5.2%
US Fixed Income Bloomberg Barclays US Agg Bond -1.7% 7.5%
Global Fixed Income Bloomberg Barclays Global Agg. Bond -4.4% 9.2%
Source: YCharts as of November 13, 2021

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